Pound To USD Forecast: Is Now A Good Time To Buy US Dollars With Pounds?

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The pound-to-US dollar forecast is an indication of where technical and fundamental analysts think the GBPUSD price may be in the future. You can use these exchange rate forecasts to help you decide if now is the right time to buy Dollars, or if you should wait until the price improves.

Highlights

  • Inflation rates may have peaked in 2023
  • GBPUSD rebounded as investors anticipate the end of aggressive rate hikes
  • Limits to further GBP upside due to a subdue economy; technical support noted at 1.200

How has the Pound performed against the Dollar recently?

Sterling rebounded into the year-end as investors bet on a softening of interest rates. Judging by recent data trends, 2023 could mark the high point for inflation rates.

Encouraged by this dovish outlook, a multi-week ‘Risk On’ mode powered many stocks, particularly in the States, to new highs.

In the FX sphere, traders focussed on dollar weakness (hence, the rebound in GBPUSD). But is the ‘High for Longer’ thesis really on its last legs?

In the last FOMC meeting, the Fed observed that inflationhas eased over the past year but remains elevated’ and that the central bank is ‘strongly committed to returning inflation to its 2 percent objective.’ Despite this statement, the market is anticipating rate cuts in 2024 – a stark reversal of the policy rate trend in 2022/3.  In fact, the drop in borrowing costs may come as early as March.

One reason is that inflation rates are falling across the world. In the US, both Core and Headline CPIs numbers have peaked and are tumbling back into the 2 percent comfort zone (see below). A ‘Soft Landing’ (defined by falling inflation numbers and low unemployment) is possible. That would be good news for investors and comparable to the so-called Goldilocks era two decades ago.

Source: Yardeni.com 

When fear subsides in the market, the greenback often suffers. This is because investors chase risk and dump safe haven assets.

In the case of GBPUSD, the rate has indeed rebounded from 1.200/1.210 to 1.270/1.280. Technically, however, the rate remains in a broad ranging pattern with the floor at 1.180-1.200 and the ceiling at 1.300. The ongoing economic challenges are deterring GBP from staging a further recovery.

GBPUSD Exchange Rate Chart

Is it a good time to buy US Dollars with pounds?

Sterling has had a good run from its autumn lows.

This strength, however, is encountering some selling pressure near the psychological 1.3000.  From here, a correction back to 1.250 is possible.

Is now, then, a good time to buy Dollars with a revived Sterling?

Given GBP’s new-found strength, changing USD now may not be a bad move. Who knows, the rate may suffer a bigger-than-expected decline if UK macro data underwhelms investors. I would scale in to buy some dollars now rather than buying all in one shot. Market volatility is high these days.

Will the pound get stronger against the USD in the first quarter of 2024?

One of the general rules in the FX market is that the greenback usually depreciates during a ‘risk on’ phase. This is because other currencies outperform the USD as risk appetite increases.

Unsurprisingly as Dow climbed to record highs, GBPUSD rebounded to 1.270/1.280 in tandem.

But there are macro limits to GBP’s advancement. For a few reasons. The first is that the bulls may have gotten ahead of themselves. Yes, the Fed may obligingly cut rates this year, but will it conform firmly to the bulls’ wishes?

Should, for whatever reason, the Fed fails to cut rates in a swift manner, a general market selloff may result. This scenario is not that far-fetched given many stocks (particularly US tech) are overbought. These wonderful tech stocks are vulnerable to a correction already – Apple (AAPL) started 2024 with a gap down of 3.6 percent.

The recent stocks rallies could be a classic ‘buy the rumour, sell the fact’. Do not be surprised that when the Fed actually cut rates, stock prices begin their correction.

Second, the UK is entering into months of political uncertainty in 2024, largely due to the looming general election. A lacklustre GBP performance is possible until this issue settles down.

Third, GBPUSD is hitting technical resistance at around the psychological 1.300 level. The rally may stall here due to a lack of decisive GBP catalysts.

Based on these observations, GBPUSD is expected to rangebound in the twenties for the foreseeable future. Yes, GBP may strengthen further from here but this strength could be temporary until macro and political uncertainties fade away.

What is the GBPUSD forecast in weeks, months, and years?

In light of the above mentioned factors, most GBPUSD forecasters are not entirely convinced GBP will continue to strengthen too much from here.

In the next month, most GBPUSD forecasts are modestly bearish to neutral. Few are bullish. The natural settled rate is near the technical support at 1.2500 (see below).

Even if we stretch these forecasts further (1-quarter), the aggregate forecasts are still not much better. Simply, brokers can’t see where the GBP good news are coming from.

Therefore, given this somewhat bearish bias I expect GBPUSD to retest the near-term floor at 1.250 and a period of zigzag sideways moves.

GBPUSD Sentiment

Source: fxstreet.com

Where is the best place for buying large amounts of US Dollars from Pounds

There are two different ways people buy Euros from Pounds

  • Through a currency broker – when transferring money abroad
  • Through a forex broker – when speculating on the price of currency

You can use this comparison table of currency brokers to see how many currencies they offer, what the minimum USD transfer is and if they offer forwards and currency options as well as when they were established. You can either visit each currency broker individually or use our currency quote comparison tool to request multiple exchange rates.

Or, if you are more interested in trading GBPUSD you can compare forex brokers here.

The current GBPUSD exchange rate is $0.7900766 which is a change of -0.25% from the previous day’s closing price. Over a week GBPUSD is -0.25%, compared to its change over a month of 0.71% and one year of -4.98%.

GBPUSD exchange rate data is updated every 15 minutes.

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